Tribunal File Number: 12255/MVDA
Motion pursuant to s. 9(11) of the Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch. B, to stay an Order of the Tribunal revoking the registrations.
Between:
Toronto Quality Motors Inc., 2291683 Ontario Inc. o/a The Auto Dealer
and Khaled Mousa-Khaled
Appellant
and
Registrar, Motor Vehicle Dealers Act, 2002
Respondent
REASONS FOR DECISION & ORDER
Adjudicator: Jennifer Friedland
Appearances:
For the Appellant: Symon Zucker, Counsel Laney Paddock, Counsel
For the Respondent: Diana Mojica, Counsel
Date of Motion March 19, 2021 by teleconference March 25, 2021 further submissions in writing
A. OVERVIEW
1This is a motion brought by Mr. Khaled Mousa-Khaled (“MK”), Toronto Quality Motors Inc. (“TQM”), and 2291683 Ontario Inc., which operates under the name “Auto Dealer” (“Auto Dealer”) for a stay of the Tribunal’s order dated February 6, 2021 (“the Order”) pending the appellants’ appeal to the Divisional Court.
2The Order directed the Registrar to carry out its proposal issued under s. 9(1)(b) of the Motor Vehicle Dealers Act, 2002 S.O. 2002, c. 30, Sch. (“MVDA”) to revoke the registrations of MK, TQM and Auto Dealer as a salesperson, a motor vehicle dealer and a motor vehicle dealer (wholesale class), respectively.
3The Registrar suspended the appellants’ registrations in accordance with the Tribunal’s order on February 8, 2021.
4On February 12, 2021, the appellants appealed the Tribunal’s order to the Divisional Court pursuant to s. 11(1) of the Licence Appeal Tribunal Act, 1999. This provision allows the appellants to appeal to the Divisional Court as of right on questions of fact and law. Leave to appeal is not required.
5The appellants now seek a stay of the Tribunal’s order pending their appeals pursuant to s. 9(9) of the MVDA, which provides that an Order of the Tribunal takes effect immediately even if it is appealed, “but the Tribunal may grant a stay until the disposition of the appeal.”
6The respondent, the Registrar under the MVDA, opposes the appellants’ request for a stay.
B. DECISION
7For the reasons that follow, the stay is granted with conditions.
C. BACKGROUND FACTS
8The facts on which the Order was based are set out in the Tribunal’s decision at 2021 CanLII 11891 (ON LAT) and will not be repeated at any length here. Suffice to say, the Tribunal found that MK, as a salesperson, and as the sole director and operating mind of TQM,
212… had engaged in a pattern of deception intended to avoid the dealer’s obligation to disclose to purchasers previous accident damage in writing on the bill of sale.
213In most cases that deception involved the following elements:
withholding information about previous accident damage,
not including this information in writing on the bill of sale as required,
requesting that the customers sign a bill of sale with the comments section empty or almost empty,
failing to provide the customers with a bill of sale upon signing, and
later providing a copy of the signed bill of sale with the required disclosure written in.
9The Tribunal found that MK had also made a false statement in a renewal application.
10Combined with conduct that led to convictions under the Provincial Offences Act in 2013 and 2018, the Tribunal found there were reasonable grounds to believe that MK would not carry on business in accordance with the law and with integrity and honesty.
11The Tribunal determined that revocation was the appropriate remedy.
The appellants’ circumstances
12MK had been registered as a salesperson since 2006 and as a dealer since 2007. His sole income over the past 15 years had been earned through the dealership. He relied on that income to support his wife and three children. He is also financially responsible, as a sponsor, for his parents and siblings who have immigrated to Canada. He further states that he relied on his income to send funds to relatives in Syria.
13MK does not have employment or training in other areas. His basis for seeking a stay pending appeal is that he would suffer irreparable harm without a stay. His overhead is high and he would not be able to financially recover and resume operations should the appeal be successful.
D. ANALYSIS
14The following test for granting a stay pending appeal is set out in the Supreme Court of Canada case, RJR-MacDonald v. Canada (Attorney General):
a) The appeal raises a serious issue;
b) The stay is necessary to avoid irreparable harm; and,
c) The balance of convenience favours granting the stay.
Does the appeal raise a serious issue?
15The Registrar concedes that this first branch of the test is a relatively low threshold and will generally be met provided the appeal is not frivolous or vexatious.
16The Notice of Appeal was filed by counsel who was counsel at the hearing (and is not counsel on the appeal). The Notice of Appeal lists 25 grounds of appeal. It appears to be a laundry list covering every imaginable ground of appeal and there is little doubt that some of those grounds are without merit. Nonetheless, after reviewing the Tribunal’s reasons, as well as the Notice of Appeal, I conclude that the appellants have satisfied this relatively low threshold and that their appeals are not frivolous or vexatious.
Is the stay necessary to avoid irreparable harm?
17The appellants rely on affidavit evidence of MK that his sole source of income has been the TQM dealership as set out above.
18The Registrar submits that there is insufficient evidence for me to conclude that MK has no source of income apart from the dealership or that he has to support his family and extended family. It further argues that the harm that may be felt by MK’s family is an irrelevant consideration as the Tribunal must focus on irreparable harm suffered by only the litigants to the motion. Additionally, the Registrar submits that there is a service department attached to TQM that could continue to operate pending appeal. The Registrar further suggests that, if – as MK asserts in his affidavit – he has sold approximately 400 cars since the Notice of Proposal was issued in July 2019, then he likely has a financial “cushion” he could rely on pending appeal.
19MK attended the motion and was made available to the Registrar for cross-examination, which invitation was declined. His affidavit evidence is therefore uncontradicted on this issue. This includes his statement that the TQM service department provided service usually only for in-house cars sold through TQM and that the service department cannot generate revenue to sustain TQM pending appeal.
20The Registrar submits that if I were inclined to order a stay, I might do so only in relation to the appellant’s wholesale registration, which would allow him to earn some income in the meantime. The financial viability of Auto Dealer was not addressed in MK’s affidavit other than by its absence and the assertion that TQM was his sole source of income. Though not under oath, MK was asked by counsel during the hearing about his wholesale dealership. He answered that he had not operated as a wholesaler for some period, if at all (his answer was not particularly clear, frankly). I am left with the uncontradicted evidence that TQM was MK’s sole source of income until revocation.
21It is open to me to accept some, all or none of MK’s evidence. In the circumstances of this case, I accept that if MK is successful on appeal but unable to operate TQM in the meantime, he will suffer irreparable harm. I accept that his overhead is too high to maintain the premises pending appeal if he cannot operate the dealership during that period.
Whether the balance of convenience favours a stay
22This branch of the test requires me to weigh the interests of the appellants against the public interest. The MVDA is consumer protection legislation. The appellants’ registrations have been revoked on the basis that MK’s past conduct affords reasonable grounds to believe that he will not conduct business in any of his various capacities with honesty, integrity or in accordance with the law. In directing the Registrar to carry out its proposal the Tribunal found that MK had engaged in a “pattern of conduct that was not just dishonest, it contravened and undermined regulatory requirements that are fundamental to the protection that the legislation affords to consumers” (paragraph 223).
23The Registrar argues that the balance of convenience favours protecting consumers from further harm from the appellant. It points to the Tribunal’s decision to revoke the registrations rather than allowing registration subject to conditions that might allow the appellant to continue earning a living in the industry while providing safeguards to the public.
24The Registrar points to two new complaints recently pursued by the Registrar about vehicles purchased from TQM. One complaint was received in January 2021 and referred to a vehicle purchased in May 2019, before the Notice of Proposal was issued. The other complaint was received in May 2020 with respect to a vehicle bought from TQM in February 2020 – after the NOP had been issued but before the hearing. The Registrar submits that these complaints show that MK continues to engage in the behaviour that led to the revocations.
25The appellants submitted a reply affidavit from MK purporting to show that disclosure had been provided in both cases. As that reply affidavit was provided on the day the motion was argued, I allowed the Registrar time to respond. The Registrar then submitted an affidavit from the consumer who had purchased the vehicle prior to the NOP being issued. This affidavit evidence significantly undermined MK’s reply evidence and suggests that the disclosure MK claims to have made was actually written onto the bill of sale after the complainant had signed it. The Registrar submits that this complaint parallels the conduct found by the Tribunal that led to the appellants’ revocations. I agree with this characterization.
26As the appellants point out, however, the above complaint relates to a sale that occurred prior to the issuing of the NOP. It does not prove that the alleged behaviour is ongoing.
27The second complaint is less compelling. It is not supported by an affidavit from the consumer and the records that were provided by the Registrar’s affiant show that despite follow up from the Registrar, there has been no reply since the complaint was first made in May 2020. Further, the complainant, in his complaint, acknowledges that the car was brought as is. The complainant also did not recall whether he had read the bill of sale. On its face, this complaint does not persuade me that the appellant continues to engage in disreputable conduct.
28In considering the balance of convenience, I find that the public does need to be protected from the potentially unscrupulous and dishonest conduct of a dealer whose licence has already been revoked. Therefore, the question I must ask myself is whether the public could be so protected were a stay to be granted. If not, the balance of convenience would weight against the appellants and, in my view, would be determinative of the outcome.
29The appellants rely on the Tribunal’s decision in Abdul-Hussein (c.o.b. B & A Auto Sale) (Re)1 for the proposition that the public could still be protected during the period of the stay because the legislation provides the Registrar with broad powers to enforce a registrant’s compliance under the MVDA.
30I respectfully do not agree that it should fall to the Registrar to monitor the appellant in order to prevent him from repeating conduct that the Registrar has already proven. I appreciate that the appellants are appealing that Order. Nonetheless, as of now, the facts are proven and the MVDA does not allow an automatic stay of the decision – as it does under other legislation. Presumably this is for a reason; namely, that in some cases, revocation is immediately necessary to protect the public notwithstanding that the matter is being appealed. In my view, while the Registrar would of course maintain its administrative and oversight functions, it ought to be the appellant who provides ongoing proof of compliance if he wishes to obtain a stay pending appeal.
31The parties were provided the opportunity to make submissions as to what or whether conditions might adequately protect the public if a stay were granted pending appeal. The appellants maintain that conditions are not necessary as the MVDA already requires compliance. In the alternative, the appellants propose conditions relating to posting security in the amount of $20,000; record keeping and forwarding information to the Registrar; as well as pursuing their appeal with dispatch.
32The Registrar requested that the appellants post security in the amount of $100,000 if I were to grant a stay. The Registrar maintains, however, that the public interest and the protection of the public are of such compelling importance that the appellants’ application for a stay must be dismissed.
33I find that the public can be protected by imposing conditions on the stay. Therefore, the balance of convenience weighs in the appellants’ favour in this case.
E. Conclusion
34I have found that the first and second branch of the test favours the granting of a stay. In particular, I accept that the dealership is MK’s only source of income and that without the stay the appeal may be pointless as the appellants’ dealership will likely be forced out of business before then. With respect to the balance of convenience, my view is that if the public cannot be protected during the period of the stay, this factor would weigh against the appellants and would be determinative of the outcome. In this case, however, I find that the public can be protected if the stay is granted with conditions.
35Based on the above, I am granting a stay of the Order with conditions that put the onus on the appellant to provide proof upon request that appropriate disclosure is being made for every transaction that occurs during the stay. In this way, the public will be protected and the appellant will not suffer irreparable harm pending the disposition of the appeal.
36There was some uncertainty as to whether the transcripts from the hearing had been ordered. The Registrar thought that the deadline had been missed. Meanwhile, the appellants understood that the transcripts had been ordered by counsel who appeared at the hearing. The Registrar confirmed that it would not object if the appellants’ request for transcripts were made past the deadline. As a result of this uncertainty, I am adding a provision that the Stay not take effect unless and until the transcripts have been ordered.
37The other conditions below reflect, with minor variations, the conditions suggested by the appellants.
F. ORDER
38Pursuant to s. 9(9) of the MVDA, I grant a stay of the Tribunal’s Order dated February 6, 2021, pending the disposition of the appeals filed by the appellants and subject to the following terms and conditions:
a) The Stay shall not take effect unless and until the appellants have provided proof to the Registrar that the transcripts from the hearing have been ordered.
b) The Stay shall not take effect until the appellants have posted with the Compensation Fund a letter of credit, cash, or negotiable security in the amount of $20,000 as indemnity for any claims made by consumers to the Compensation Fund, arising out of transactions that have or may occur between February 6, 2021 and the outcome of the appeal.
c) In addition to maintaining books and records as required by the Motor Vehicle Dealers Act the appellants shall maintain a separate record of all transactions made as of the date of this Order which shall include the following:
i) the VIN, make and model number of the vehicle; and
ii) all pertinent details of the vehicle’s history;
iii) a signed acknowledgement from the consumer, attached to the Bill of Sale, stating that the consumer has received a copy of the attached Bill of Sale with respect to the transaction; and
iv) a copy of the signed acknowledgement and Bill of Sale referred to in (iii) above saved in electronic format within 24 hours of the transaction (this condition may be satisfied by a photograph taken of both items from a cell phone camera).
d) The records referred to in c) (i)-(iv) above shall be forwarded by the appellant, MK, to the Registrar at the end of each month commencing April 30, 2021 and otherwise made available to the Registrar within 24 hours of request.
e) The appellants shall proceed expeditiously with their appeals.
f) The Registrar may bring the matter back before the Tribunal if there is a breach of any of the above conditions, at which time the Tribunal will consider whether the stay should be lifted.
LICENCE APPEAL TRIBUNAL
_______________________
Jennifer Friedland, Member
Released: April 1, 2021